The Indian American writer Jhumpa Lahiri has won Asia’s richest literary prize for her novel The Lowland, which pivots around the Naxalite uprisings of the 1960s. The Pulitzer prize-winning novelist beat four other shortlisted writers to the $50,000 (£33,000) DSC award for south Asian fiction with a work that was described by chair of judges Keki N Daruwalla as “a superb novel written in restrained prose with moments of true lyricism” written “by a writer at the height of her powers”.

At the Jaipur literature festival, celebration of the award was dampened by the announcement at the start of the ceremony that DSC, which founded and runs the prize, were withdrawing from the festival after five years. A spokesperson said they were looking for other South Asian countries to host the award though the prize itself would stand. Since the Man Asia prize failed to find a new sponsor, the DSC has been Asia’s only international award.

Lahiri – whose novel was shortlisted for the 2013 Man Booker prize – was one of a shortlist of five, alongside UK-based Kamila Shamsie and Romesh Gunesekera (from Pakistan and Sri Lanka respectively), Pakistani Bilal Tanweer and Indian poet-turned-novelist Shamsur Rahman Faruqi. She is the first American to win the award, which is open to any novelist writing about the nine countries defined in the rubric as south Asian.

Daruwalla said of the prize finalists: “All the novelists engaged with rich, historical and experimental traditions of storytelling. The landscape in all the novels was quintessentially south Asian. Most … grappled with socio-political realities on the ground. All of them did so in ways that were moving, challenging and thought-provoking.”

Of the prize’s four previous winners, Jeet Thayil and Cyrus Mistry are from India, Shehan Karunatilaka is Sri Lankan, while HM Naqvi is from Pakistan.

The DSC spokesperson said: “The change for next year is that [DSC] plan to announce the winner in another part of South Asia, not at Jaipur, to reflect the fact that the prize covers the whole region. They are seeking some additional sponsorship to ensure that they develop the prize, and that it remains sustainable, but are still fully supporting it.”